ACCC fuels new court action over Coles and Woolworths’ use of bundled shopper docket discounts

A new chapter in the shopper docket saga is underway, with the Australian Competition and Consumer Commission launching proceedings in the Federal Court against Coles and Woolworths for an alleged breach of court enforceable undertakings.

The ACCC is calling into question whether the two supermarket giants are acting appropriately by allowing customers to bundle together shopper docket fuel discounts to increase the value of a discount to over the allowed 4 cents.

In December last year, the ACCC accepted court enforceable undertakings from Coles and Woolworths to voluntarily limit fuel discounts that are linked to supermarket purchases to a maximum of 4 cents per litre.

These undertakings took full effect on January 1 this year.

The ACCC alleges Woolworths is breaching the undertaking with its current offer of a bundled discount of 8 cents per litre, combining a 4 cent discount docket from both the supermarket and petrol stations.

For Coles, the ACCC alleges its offer of a bundled discount of 14 cents per litre, comprising dockets for 10 cents and 4 cent discounts, is a breach.

ACCC chairman Rod Sims said after an “extensive investigation” the watchdog had been concerned fuel savings offers could have longer-term effects on the structure of the retail fuel markets.

“We accepted the undertakings because they addressed the ACCC’s principal competition concerns and allowed the matter to be resolved quickly and efficiently,” he said.

“It is pleasing that Coles and Woolworths advise that they are honouring their undertakings to fund all fuel discounts from their fuel operations, but we are concerned that the bundled discount offerings in excess of 4 cents per litre are contrary to the terms of the undertakings.”

In a separate proceeding, Woolworths has sought a declaration in relation to a proposed future fuel discount offer. However, the ACCC also considers this would breach Woolworths’ undertaking.

A statement from Woolworths said the company “remain disappointed that we have been curtailed from offering greater petrol discounts to our customers”.

“We have discussed with the ACCC making our discounts independent of each other, and this change is underway,” Woolworths said.

“We believe our undertaking with the ACCC allows customers to combine offers of 4 cents from the supermarket and 4 cents from the petrol store to receive 8 cents a litre off their fuel.”

Woolworths has asked the court to make a declaration that allowing customers to redeem both discounts at the same time is in accordance with the undertaking.

Coles said it “vigorously defends” its ability to offer its customer great value on both groceries and fuel.

“We welcome the opportunity to clarify conflicting interpretations of the voluntary undertaking on fuel discount dockets in court.”

The Master Grocers Australia chief executive Jos de Bruin was pleased to see the ACCC take action, and called into question the degree to which the two retailers could be trusted.

“It is extraordinary that Coles and Woolworths are accused of breaking their voluntary agreement with the ACCC less than three months after it was struck,” he said.

“It is right that the ACCC launch this prosecution because it shows that these two companies – which are amongst the biggest in Australia – are not beyond the law.”

De Bruin said the two business have “an unfortunate record of playing brinksmanship with the law and then, apparently, daring the regulator to take them on”.

“It is pleasing to see that Rod Sims has, indeed, taken them on. But why do we need to spend more taxpayer dollars just to get two of Australia’s biggest companies to stick to a legal agreement?”

He said fuel shopper dockets have been “devastating to our businesses” as they have dragged consumers away from the store network.

A directions hearing for both supermarkets is set for April 4 in the Federal Court Sydney.